vault backup: 2022-06-12 14:07:30

content/notes/25-cost-benefit-analysis.md

@@ -40,8 +40,53 @@ tags:
 	- familiarity and expertise (low familiarity -> higher risk)
 	- size (larger -> higher risk)
 	- compatitibilty (with existing systems; less -> higher risk)
-	- e.g., IBM police 90's fil
+	- e.g., IBM police 90's failure
 - will it be worth it (economic)
+	- costs and benefits
+	- quantify costs and benefits
+	- asses economic value
+		- payback period
+		- NPV
+		- ROI
+	- convers both "should" and "can" form financial perspective
+		- can we afford it
+		- will it provde financial benefit
+		- are funds available
 - includes considerations of risk and uncertainty
 - may revisit due to uncertainty
 
+# costs and benefits
+## identify
+costs
+- development
+	- salaries, pm costs, testing and qual control
+- operational
+	- maintenance, licensing, servers, training, 
+
+benefits
+- tangible
+	- reduced customer service costs, more efficiet (saves staff costs), legal compliance
+- intangilble
+	- security
+	- market share
+	- improved perception of company "cool", happier staff
+
+# quantify
+dollar values. usually estimates/guesse
+
+e.g.,
+- dev team salaries (assumes accurate estimate of required effort)
+- increased sales (how to predict)
+- improved customer satisfaction: how to assign dollar value
+- smarter student management system with better prerequisite, modelling: how to estimate benefit
+- these are tangible benefits, intangible benefits are harder
+
+# assess economic value
+- payback period - how long until accumulated benefits equal the cost  
+- NPV: sum of costs and benefits , but future years discouted
+	- ![example](https://i.imgur.com/W6lhzKb.png)
+- ROI: what is the discounted benefit relative to the costs
+- 
+
+
+